Draft PR
The Pakistan Credit Rating Agency Limited

Jhangeer Hanif

Muneeb Rashid

Applicable Criteria

  • Methodology | Corporate Rating Methodology (Jul 17)
  • Methodology | Correlation between long-term and short-term rating scale (Jun 17)
  • Methodology | Criteria Modifiers (Jun 17)

Related Research

  • Sector Study | Power DISCOs (Jun 17)
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PACRA Maintains Entity Ratings of K-Electric Limited on Rating Watch with Developing Status
 Rating Type Entity
 Action Maintain Rating Watch
 Long Term AA AA
 Short Term A1+ A1+
 Outlook Developing Developing
 Rating Watch RatingWatch -

The company is filing application with SECP for direction to hold AGM for 2017 on receipt of NEPRA decision on the reconsideration request of Ministry of Energy, Government of Pakistan. Accordingly, the date for holding AGM will be determined. Hence receipt/ publication of accounts for FY 2017 are depending on convening the AGM.

Given extension in holding of AGM for FY17 and subsequent delay in quarterly accounts, PACRA maintains the assigned Rating Watch (Developing Status) to the rating of KE. PACRA would continue to monitor the developments and will update its rating opinions accordingly.
About the Entity
K-Electric, a vertically-integrated power utility, has been in operations for more than a century. At end-Nov17, KES Power Limited (KESP) held 66.4% share in KE, while Government of Pakistan owned 24.4%. KES Power majority is owned (53.8%) by Abraaj Capital (Private Equity Group) with the balance held by a group of investors (Al Jomaih, Saudi Arabia and NIG, Kuwait). KES Power has lately entered into a share purchase agreement with Shanghai Electric Power Company Limited (SEP) for sale of up to 66.4% shares of KE against a consideration of US$ 1.77bln. The transaction will close once customary closing conditions and requisite regulatory approvals are obtained.

KE has a thirteen-member board that comprises nine representatives of KES Power, three GoP members and one independent member. The CEO - Mr. Tayyab Tareen is supported by an experienced team.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.